580. Can you explain what is "fairly limited"?
What is "fairly limited" to some people may be crucial
to others and many companies may be on the edge of viability and
another cost could just tip them over the edge.
(Dr Curran) It is very difficult to do. Again, if
you were looking at a level playing field and if you were looking
at the Environment Agency current charging scheme for abstraction,
there is a very complex process there by which various factors
are multiplied together to end up with an annual cost of having
a licence. Those factors include a basic charge per unit volume
of water abstracted, which varies across different areas of England
and Wales. You multiply that by a source factor, what type of
river it is or ground water that is being abstracted from. That
is, quite simply, is it a supported source, are you having to
introduce new water to keep that river running and then somebody
else is taking it back out again, so I do not think that is going
to be a very commonly used factor in Scotland. There is the season
factor in that clearly if you are abstracting in the winter there
is less likelihood of damage to the environment than if you are
abstracting in the summer when there are low flows or low aquifer
levels. There is a loss factor, is the abstracted water returned
to the same river very shortly afterwards downstream or is it
taken right out of the catchment? You can multiply these up and
get typical charges. For the purpose of appearing before this
Committee I did one example. I do not know if I should perhaps
even mention it because the figures are very much estimates. I
do not know how much reliance to put on these figures.

581. They will be treated as such, but now that
you have mentioned it we would be very disappointed if you did
not.
(Dr Curran) Since we have no role in abstraction control,
or a very limited role in abstraction control at this stage, we
have very little feel for the figures that might be used. We did
estimate that a typical distillery, just by chance, may be abstracting
90 litres per second. The largest abstraction clearly is for cooling
water. That figure may not mean much to you but it seems quite
a significant amount of water to me. I have done my best to apply
the Environment Agency charging scheme to that and I reckon, and
I hope I have not made any mistakes, that the annual licence charge
will be around about £1,000 a year for that. There is an
application fee as well when you apply for a licence which is
£110 at the moment. So when I say "limited", that
is the kind of figure I have in mind for an industrial site like
that. Clearly there will be large abstractors, like hydroelectric
or public water suppliers, which will be abstracting very, very
significant volumes and they may attract higher charges.

Mr Brown

582. Obviously the Environment Agency have stated
that they must pay special attention to the effects of any proposals
on the economic and social wellbeing of rural communities. The
fact that they are actually required to measure any impact of
that policy on rural communities is important. Does SEPA have
a similar responsibility and, in a general sense, how does SEPA
draw a balance between the environmental, sustainable development
and economic impacts of any proposals?
(Ms Henton) Yes, we do have a general requirement
to take into account such impacts. My colleague can explain a
bit more about the process of licensing, for example.
(Mr Mitchell) In terms of licensing discharges to
the environment, and obviously there will be a similar sort of
thing for abstractions, there is a cost benefit analysis generally
done in terms of how much additional requirements will be needed
to protect the environment. There are a number of overriding factors
in terms of fixed emission limits if there are European Directives
or something like that that drive these. In terms of legislation,
generally we apply getting the best but not requiring excessive
costs. Most licences are generally given in draft to the person
to be authorised and there are discussions around what level of
treatment will be required. In general if they come back and point
out that this will cost them significant amounts, if this is an
existing situation that will generally be phased. There are situations
where the costs to the company are taken into account and if it
is a drive towards a standard which is a best practice standard
then generally that is phased.

Mrs Adams

583. Some of these rural communities are very
fragile indeed. I do declare an interest in that I am the Chair
of the Scotch Whisky Group in Parliament. These areas sometimes
depend greatly on the whisky industry. Who does strike a balance
as to what comes first, the environment or the community that
it sustains? Would you push it to the point where the whisky industry,
for example, could no longer support that community and that community
dies and, therefore, there is no need for water anyway if that
happens? Who strikes that balance?
(Ms Henton) That is a very interesting question and
there is not a very straight forward answer to it. It is not something
that is unique to the whisky industry.

584. No, I gave that as an example.
(Ms Henton) We face this from a number of other sectors,
for example the marine aquaculture sector at the moment, fish
farming. We have exactly the same question that comes from that
because we authorise them in the same way as we authorise the
Scotch whisky industry. To begin with there is basic European
legislation, basic UK legislation, which has to be implemented
and some of these are given, as Stewart has alluded to, some of
them we have a degree of discretion over. We seek, as a matter
of principle, as a protection agency to be fair, equable, to take
into account all these issues that you have indicated. At the
end of the day there is a process for appeals to Scottish Ministers
built into all the regulation that we implement, so if the person
who is going to be licensed feels that we have overstepped the
mark, that we have not been fair, that it is inequitable, they
have a right of appeal to Scottish Ministers and ultimately the
decision does rest there.

Mr Tynan

585. This is really just for clarification.
You say you have 22 offices?
(Ms Henton) Yes.

586. And 750 staff?
(Ms Henton) Yes.

587. How many offices do you have in Scotland?
(Ms Henton) They are all in Scotland.

588. On the question of strict controls, what
was said by Dr Curran was if there were no controls then anyone
could abstract water. Could I pose a situation where natural mineral
water is abstracted from the ground and there is very strict regulation
as regards that abstraction and the quality of that water. I understood
from one of the companies we visited they have some 300 acres
of ground. Do you feel that it is necessary to protect the environment
to the degree that you would seek to protect it on the basis of
the company's co-operation as regards the abstraction of that
mineral water and the tests that they have to ensure the purity
of that water exists? Do you believe that it is necessary in comparison
with other European countries, for example, for Scotland to have
rigid application of licence applications?
(Dr Curran) That is quite a wide ranging question.
Again, if I can go back to the Water Framework Directive, which
is obviously going to guide us in this area in the future, in
the very first paragraph of it, it states "Water is not a
commercial product like any other, but rather a heritage which
must be protected, defended and treated as such". That is
the whole basis of the Framework Directive. The fact that, if
you like, the operator owns the whole catchment, or indeed the
whole land surface covering an aquifer, does not remove the obligation
to meet the objectives of that Directive which are largely ecological
in content in that we have to maintain and improve the ecological
status of the natural waters. As an agency we always try to work
with industry, clearly that is easier. Taking a hypothetical example
of a bottled water abstractor, they will certainly have an interest
in protecting the quality of the water they wish to abstract from
that aquifer and, therefore, they would have a clear interest
in various pollutants not being able to enter that ground water
and, again, that falls to us as the environmental regulator to
control that. Equally, they would be interested in another operator
not coming along and sinking another borehole into the same aquifer
and abstracting the water that they would wish to bottle. I think
there is a lot of argument bound up in your question. Am I being
helpful or not?

589. To a degree. Really we have a situation
where, as the Chairman made the point, we could be at the margins
as regards a company continuing to operate. If the regulation
is too strong where it is not necessary it could be the difference
between success or failure for that company. Obviously our concern
and investigation is we are looking at employment in Scotland
and you have considerable employment, 750 staff, but I am looking
at a situation where a small company produces pure mineral water
because, unlike other countries in Europe who do add to their
natural mineral water and then sell it on to the UK, within Scotland
that is not the case, so they have a vested interest in making
sure of the purity of the water. I am wondering if that would
be a light touch regulation as far as you are concerned and is
that the way you would view it?
(Dr Curran) It is a very difficult question to answer.
There are requirements under the forthcoming Water Framework Directive
and whether SEPA ends up as the competent authority or not we
wait to see. There are requirements to meet the specific objectives
of the Directive and to report them back to the Commission, so
the Member States have to undertake those obligations or presumably
they will be in trouble. Having said that, there are already controls
in place to hopefully maintain the quality of that ground water,
things like the Ground Water Regulations, the Nitrates Directive
and so on, so perhaps I do not see the potential for the kind
of difficulty you are suggesting. However controls may need to
be put on the rate of abstraction in order to meet the environmental
objectives of the forthcoming Framework Directive. If those controls
drove below certain thresholds the amounts that could be abstracted
and, therefore, made the industry unviable then it is very difficult
to get around that in terms of the Directive. The only get-out
clause I can think of is one that does relate to industries contributing
to overall sustainable development and if arguments could be based
on social or economic grounds under the term "sustainability"
then perhaps there may be some sort of derogation from the fundamental
requirements of the Directive. That is all I can proposition at
this stage.
(Mr Mitchell) Can I just add something which may be
an advantage to industry if there is a system whereby there is
some registration of discharges. If we take the example that you
have given of this mineral drinks abstractor drawing from an aquifer,
at the moment because he is unlicensed by SEPA presumably the
environmental health will know about him but SEPA does not know
about him. If there is any proposal by someone to either discharge
something on the land which may affect him, or if there was a
surface water abstractor, and there are many in Scotland, drawing
drinking water or cooling water or even process water from rivers,
if we know about that we can at least warn him that there has
been some upstream incident which perhaps allowed a slug of pollution
into the river, oil pollution or something, so he can protect
his resource at that point and close off the intake or whatever,
or make representations at the time when it happens. At the moment,
because there is this unknown quantity as to where people are
abstracting, whilst we endeavour to protect and warn of pollution
incidents where we are aware of abstractors, if there was a more
comprehensive system we might be able to act more comprehensively
in the protection of their resources, which is obviously their
business as well. So there is another side to the coin perhaps.

Sir Robert Smith

590. You mentioned earlier in answer to the
Chairman about in effect rationing the water if there was an over
demand for a particular source and then you read out that charging
scheme and I thought the implication was it was just to recover
costs, but then it seemed to be very much aimed at rationing because
in the summer you pay more than you do in the winter and if you
are a high volume user you pay more. I cannot see how costs necessarily
would relate to that.
(Dr Curran) The figures I was quoting there, as I
say, are very much estimates and are based on a pure cost recovery
scheme, that is recovering the costs of administering and monitoring
the abstraction control regime.

591. Why would it cost more in the summer than
in winter?
(Dr Curran) Because you would have to go out and do
more monitoring. If you were in a dry spell clearly you would
need to be out in the streams or on the rivers actually monitoring
the flow to see if you were getting below critical levels which
would do environmental damage, ecological damage.

592. When it comes to the rationing, if there
is not enough water to go around who decides who gets first call?
Is it first come first served?
(Dr Curran) Again, the Environment Agency experience
says something about that in that they do try, and I hope I am
not misrepresenting them again, to take a fairly sensible approach
in trying to marry both of those. If there is an existing abstraction
then, to some extent, that deserves a priority. In terms of the
Directive there would need to perhaps be notice given that conditions
might change in the future to try to give operators or industry
a lead-in time so that they could adjust their processes or build
in some storage or adopt more efficient water usage, technologies
and so on, so that adjustments could be made with time. Hopefully
there would be nothing produced with immediate effect that would
cause serious concern to operators.

Mr Clarke

593. I am going to talk about effluent, discharge
of industrial waste. We went to the Isle of Islay and there are
a few distilleries there that have been pumping effluent into
the sea for a long time, only for them to discover a circular
came from the European Commission which was based, in their opinion,
on what was being discharged in the Mediterranean rather than
the North Sea. They thought that the imposition that was put on
them was something that was not needed. They said that the area
that they were dumping into was a bay and it was not detrimental
to the molluscs because the fishermen said that they were catching
bigger and better beasties than they had before. They have got
to transport this and extend the pipeline in another direction
into the sea and this is a cost to them. These island distilleries
are very, very prone to costs because they are not on the mainland
and everything is an extra burden on them. Here we have a situation
where they thinkthis is what they said to usthis
is of detriment to them and it is being forced on them not because
of a North Sea problem or a West Coast problem but a Mediterranean
problem. Do you feed back to the Ministers these concerns so that
they can adjust accordingly or adapt accordingly these Directives?
(Ms Henton) Perhaps if I could say a few words. First
of all, none of us around here are totally familiar with the Islay
situation. We are all aware of it but none of us here has actually
dealt personally with it. If you want details of it we can supply
that, there is no problem at all[4]

Chairman

594. I think that would be helpful.
(Ms Henton) In terms of European Directives, this
is a question that does generate a lot of debate obviously, but
the fact is that the UK is a Member State of the European Union,
it has signed up to these Directives and, as you are aware, they
go through a very, very long process of discussion in the Commission,
in the Parliament, before they reach agreement. At the end of
the day the UK Government will be signed up to them. They then
cascade through Westminster and through the Scottish Parliament
in terms of actually implementing the legislation. We, as the
body responsible for implementation of the legislation, seek to
carry that out fairly, equably, openly, etc. We know that with
some of the early Directives there have been difficulties and
we do feed that information back both through our own sponsor
department, the Scottish Executive, and also directly to the Commission,
we are able to provide information to them. So where there are
particular problems or anomalies caused by any of the Environmental
Directives we do take those up through the appropriate channels.
At the end of the day though there is legislation there which
we are required to implement and, again, we do it as fairly and
equably as we can. I hope that reassures you on that issue.
(Mr Mitchell) Can I just add a slight addition to
that. In terms of the Urban Waste Water Treatment Directive, which
is to what you refer, there is specific provision in the Directive
and in the ensuing regulations for Scotland which does make a
separate allowance for discharges of industrial effluent which
do not enter what are known as urban waster water treatment plants,
basically sewage treatment plants. If there is a sewage works,
for instance, which takes distillery effluent, and there are some,
then the Directive requires specific conditions for sewage effluent
which would have to be met. Where the distillery effluent discharges
directly to the sea then the thing that governs the licence, and
the Directive makes specific provision for this, is the Environmental
Quality Standards. So, for somewhere like Islay, and I have to
confess I am not familiar directly with what is going on there,
the driver for the effluent standard would be the Environmental
Quality Standard, not the Directive.

Chairman: We do have some specific questions
on policing of regulations later on. I think we will move on now
because we still have some way to go and we have other witnesses
and we are falling behind. Can I move on to the Control of Major
Accident Hazards, the COMAH Regulations.

Sir Robert Smith

595. Do you feel that the level of impact assessment
and complexity of the information required by the Competent Authority
(SEPA and HSE) appropriate to the risks involved in the whisky
industry?
(Mr Mitchell) I will try and answer that as best I
can. We feel that it is appropriate. Where the whisky industry
is located is often in some of the most environmentally sensitive
areas in Scotland. If you take, for instance, the River Spey,
the River Spey has a large concentration of the whisky industry
and the River Spey itself is a special area of conservation for
several species: salmon, otters, freshwater pearl mussels, these
sorts of things. This is the first year of the COMAH Regulations
so everyone is on a learning curve, industry as well as SEPA.
The problem at the moment is that in our inspections of the distilleries
where they find there is a shortfall at the moment is that whilst
the distillers themselves have the health and safety aspects looked
at, the trips and slips they have always looked at, where they
have not gone is the extra little bit that the regulations require,
to look at if they were to have a large spillage of spirit, a
large fire, what would be the environmental consequences of that.
We feel that they have not done that yet. There has been a lot
of discussion with them and, so far as I am aware, they are co-operating
and we are co-operating with them and giving them time to actually
do these assessments.

596. Do you have any experience of a major accident
hazard in the whisky industry?
(Mr Mitchell) I do not personally.

597. Are there any records?
(Mr Mitchell) There was certainly a very large incident
in Kentucky last year which gave rise to significant environmental
impact. I have no direct knowledge.

598. Is Kentucky the only one?
(Mr Mitchell) It is the only one I am aware of that
springs to mind but I think there have been others. The regulations
do not pick whisky as a source of control, the regulations set
thresholds for the volume of flammable liquids stored, and whisky
is a flammable liquid. The lower tier limit, I believe, is 5,000
tonnes. 5,000 tonnes of flammable liquid in one place, in a warehouse,
is a significant risk on any standard.

599. What sort of environmental consequences
would there be of a discharge of spirit into the watercourse?
(Mr Mitchell) Whisky has a very high oxygen demand.
If it was to enter a watercourse it would denude the stream of
the oxygen and the fish and the other life would be suffocated
effectively.